Lycos is set to launch its own VoIP application and will compete direct with the likes of Yahoo and Skype.

The company will use technology from Axill Europe, having signed a 3-year exclusive deal, during which Axill has agreed to not license Globe7 to any other major portal, including Yahoo, Google, MSN and AOL.

Lycos is confident that its Globe7-based service will distinguish itself from the pack through a collection of entertainment and interactive features that aim to complement its core Internet phone functionality, said Brian Kalinowski, Lycos' chief operating officer.

The company said that with Lycos Phone, it wants to replicate a "living room" experience for users, by letting them engage in other activities while they chat, such as watching television, listening to music, conducting instant messaging sessions and surfing the web, all within the phone application's interface.

To this end, Lycos Phone can be considered a "full-service media player" with integrated features such as streaming video IPTV, MP3 player, web browser, proprietary IM network, and, later, the Lycos Mail webmail service, he said. It is necessary to pack these features within the interface because the time users spend in their VoIP applications has been and will continue to rise, he said.

"We wanted to provide something that went beyond a standard IP dialler. Lycos Phone is not only a one-stop shop application for communications, but also for consumption of media content," he said.

All calls made from a PC to a PC are free. Rates for calls made from a PC to an outside line, be it to a mobile or regular phone, vary by country.

Users can also get a free US telephone number to receive calls. To obtain one, they need to provide Lycos with their name, e-mail address and mailing address. This validation also makes them "gold" members and consequently eligible for special discounts and offers.

Lycos Phone will feature banner ads within the phone interface.

The application will be at http://www.lycos.globe7.com.